Procedural Posture

In an action arising out of a latent construction defect, the San Mateo County Superior Court, California, entered summary judgment in favor of defendant contractor. The trial court found that plaintiff property owner’s action was time-barred. The owner appealed.

California Business Lawyer & Corporate Lawyer, Inc. has the Best Corporate Attorneys in California

Overview

The court held that public policy principles applicable to the freedom to contract afford sophisticated contracting parties the right to abrogate the delayed discovery rule by agreement. Under the clear language of the parties’ contract, the owner’s action was untimely. The time for bringing the owner’s claims against the contractor started to run upon substantial completion of the project, and the lawsuit was brought more than four years after the agreed-upon accrual date, which was outside the applicable limitations period. Both parties occupied positions of equal bargaining strength and both parties had the commercial and technical expertise to appreciate fully the ramifications of agreeing to a defined limitations period. The owner had the benefit of the full statute of limitations period, up to four years, to conduct any inspections believed necessary to uncover latent defects. Because the agreed-upon accrual date was a valid, enforceable provision freely entered into by sophisticated parties engaging in a commercial construction project, the trial court was correct in granting summary judgment after finding that the owner’s claims against the contractor were time-barred.

Outcome

The judgment was affirmed.